Dismissed

Krishna Kant Gupta and 5 Others v. State of U.P. and 5 Others

Allahabad HC14 Dec 2018WRIC/34805/2018

Case brief

AI extract

What is this about?

This court dismissed a writ petition challenging an order under Section 14 of the SARFAESI Act. Relying on Supreme Court precedents, the court held that the remedy under Section 17(1) of the Act is effective and exclusive, making the writ petition not maintainable.

What did the court decide?

The writ petition was dismissed for being not maintainable as the petitioner has a statutory remedy.

Krishna Kant Gupta and 5 Others Vs State of U.P. and… — Banking and Recovery | Allahabad HC (2018)

RESERVED

Court No. - 39

Case :- WRIT - C No. - 34805 of 2018

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Petitioner :- Krishna Kant Gupta And 5 Others Respondent :- State Of U.P. And 5 Others Counsel for Petitioner :- Ramesh Kumar Shukla,Hari Bhawan Pandey Counsel for Respondent :- C.S.C.,Gyan Prakash Shrivastava

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Hon'ble B. Amit Sthalekar,J. Hon'ble Surya Prakash Kesarwani,J.

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(Delivered by Hon'ble B. Amit Sthalekar, J.)

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Heard Shri Hari Bhawan Pandey, learned counsel for the petitioners and Shri G.P. Srivastava, learned counsel for the respondents no. 3 to 6 and the learned standing counsel for the respondents no. 1 and 2.

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The petitioners in the writ petition are seeking quashing of the order dated 28.9.9.2018 passed by the Additional District Magistrate, Bareilly in exercise of powers under section 14 of the SARFAESI Act, 2002.

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Briefly stated the facts of the case are that the petitioners took a Housing Loan from the respondent Bank and also applied for Cent Mortgage Loan and the respondent Bank has sanctioned the loan of Rs. 48 lakhs under Cent Mortgage Loan Scheme and Rs. 42 lakhs under Housing Loan Scheme vide sanction letters dated 17.4.2013. It is stated that a notice dated 28.5.2018 under section 13(2) of the SARFAESI Act, 2002 was issued to the petitioners demanding Rs. 60,58,898.00. It is stated that the petitioners also submitted their reply to the notice on 13.6.2018 but thereafter the Bank issued a notice under section 13(4) of the SARFAESI Act, 2002 on 6.9.2018 requiring the petitioners to pay Rs. 62,65,940.00 with interest. It is also stated that the proceedings under section 14(1)(2) of the SARFAESI Act, 2002 have been initiated by the Bank against the petitioners in which an order has been passed by the Addl. District Magistrate, Bareilly on 28.9.2018 directing the Sub Divisional Magistrate, Sadar, Bareilly and the Inspector Incharge of Prem Nagar Police Station to complete the process of acquisition and hand over the physical possession of the property in question to the Bank. It is this order dated 28.9.2018 issued under section 14(1)(2) of the SARFAESI Act, 2002 which is the subject matter of challenge in the present writ petition.

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Admittedly, the petitioner is a borrower and he has a remedy under Section 17 (1) of the SARFAESI Act by approaching the Debt Recovery Tribunal. Therefore, no ground for interference is made out particularly, in view of the judgement of the Supreme Court in the case of United Bank of India vs. Satyawati Tandon and others , reported in (2010) 8 SCC 110 wherein the Court in paragraph 42 & 43 has held as under :

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"42. There is another reason why the impugned order should be set aside. If Respondent 1 had any tangible grievance against the notice issued under Section 13(4) or action taken under Section 14, then she could have availed remedy by filing an application under Section 17(1). The expression "any person" used in Section 17(1) is of wide import. It takes within its fold, not only the borrower but also the guarantor or any other person who may be affected by the action taken under Section 13(4) or Section 14. Both, the Tribunal and the Appellate Tribunal are empowered to pas interim orders under Sections 17 and 18 and are required to decide the matters within a fixed time schedule. It is thus evident that the remedies available to an aggrieved person under the SARFAESI Act are both expeditious and effective.

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Unfortunately, the High Court overlooked the settled law that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc. the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasi-judicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, the High Court must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute."

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In the case of Standard Chartered Bank Vs. V. Noble Kumar and others reported in (2013) 9 SCC 620 , the Supreme Court in paragraph 27 has held as under:

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"27.The "appeal" under section 17 is available to the borrower against any measure taken under section 13(4). Taking possession of the secured asset is only one of the measures that can be taken by the secured creditor. Depending upon the nature of the secured asset and the terms and conditions of the security agreement, measures other than taking the possession of the secured asset are possible under section 13(4). Alienating the asset either by lease or sale, etc. and appointing a person to manage the secured asset are some of

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those possible measures. On the other hand, section 14 authorises the Magistrate only to take possession of the property and forward the asset along with the connected documents to the borrower (sic the secured creditor). Therefore, the borrower is always entitled to prefer an "appeal" under section 17 after the possession of the secured asset is handed over to the secured creditor. Section 13(4) (a) declares that the secured creditor may take possession of the secured assets. It does not specify whether such a possession is to be obtained directly by the secured creditor or by resorting to the procedure under section 14. We are of the opinion that by whatever manner the secured creditor obtains possession either through the process contemplated under section 14 or without resorting to such a process obtaining of the possession of a secured asset is always a measure against which a remedy under section 17 is available."

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In a recent judgement of the Supreme Court dated 5.10.2018 passed in Civil Appeal No. 10251-10265 of 2018 (ICICI Bank Ltd. Vs. Umakant Mahapatra) , the Supreme Court has held as under:-

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"Delay Condoned.

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Leave granted.

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Despite several judgements of this Court, including a judgment by Hon'ble Mr. Justice Navin Sinha, as recently as on 30.01.2018 , in Authorized Officer, State Bank of Travancore and Anr. vs. Mathew K.C., (2018) 3 SCC 85, the High Courts continue to entertain matters which arise under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI), and keep granting interim orders in favour of persons who are Non-Performing Assets (NPAs).

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The writ petition itself was not maintainable, as a result of which, in view of our recent judgment, which has followed earlier judgments of this Court, held as follows :

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"18. We cannot help but disapprove the approach of the High Court for reasons already noticed in Dwarikesh Sugar Industrict Ltd. vs. Prem Heavy Engineering Works (P) Ltd. and Another, (1997) 6 SCC 450, observing :-

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"32. When a position, in law, is well settled as a result of judicial pronouncement of this Court, it would amount to judicial impropriety to say the least, for the subordinate courts including the High Courts to ignore the settled decisions and then to pass a judicial order which is clearly contrary to the settled legal position. Such judicial adventurism cannot be permitted and we strongly deprecate the tendency of the subordinate courts in not applying the settled principles and in passing whimsical orders which necessarily has the effect of granting wrongful and unwarranted relief to one of the parties. It is time that this tendency stops."

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The writ petition, in this case, being not maintainable, obviously, all orders passed must perish, including the impugned order, which is set aside.

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The appeals are allowed in the aforesaid terms.

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Pending applications, if any, shall stand disposed of."

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In view of the judgments of the Supreme Court in Satyawati Tandon (supra), V. Noble Kumar (supra) and in Umakant Mahapatra (supra), this writ petition is not maintainable as the petitioner has a remedy by way of application/appeal under Section 17(1) of the SARFAESI Act.

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Therefore, the writ petition is dismissed , as not maintainable.

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Dated: 14^th December, 2018. Kirti

Krishna Kant Gupta and 5 Others v. State of U.P. and 5 Others

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Krishna Kant Gupta and 5 Others v. State of U.P. and 5 Others

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